A Guide to Stock Investment in Malaysia

Stock Investment in Malaysia

I’ve come across numerous Malaysian individuals who are clueless on how to start stock investment in Malaysia. This post will serve to address all the daunting queries and quandaries faced by the Malaysian public regarding stock investment in Malaysia.

Bursa Malaysia

Bursa Malaysia operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services. Familiarize yourself with the trading hours of the local market as listed below.

Monday – Friday (except public holidays)

Pre-Open – 8.30 am – 9.00 am

Continuous Trading – 9.00 am – 12.30 pm

Pre-Open – 2.00 pm – 2.30 pm

Continuous Trading – 2.30 pm – 4.45 pm

Pre-Close – 4.45 pm – 4.50 pm

Trading at Last 4.50 pm – 5.00 pm

Close – 5.00 pm

Also note that when investing in stocks in Malaysia, a minimum of 1 lot is required, and 1 lot is equivalent to 100 shares. So, for example, let’s say you decide to purchase 1 lot of Nestle Malaysia, and the share price is RM70. You will require to fork out a cool RM7,000 for this minimum transaction. This is the reason why some would call Nestle an ‘expensive stock’. However this, to me is a misleading comment as the only thing that is ‘expensive’ about Nestle in this situation is its minimum investment.

Creating your Stock Investment Account a.k.a. CDS Account

Firstly, CDS stands for “Central Depository System”, and all CDS accounts are maintained by our very own Bursa Malaysia Bhd. As an individual, one will have the option to create either a Direct CDS Account or a Nominee CDS Account. To cut to the chase, I would advise opening a Direct CDS Account for the Malaysian individual as the only advantage of a Nominee CDS Account is you as a shareholder will not need to worry about the paperwork related to any corporate exercises.

Your next question will naturally be: “Which broker should I patronize and open my CDS account with?” The answer to which can be found HERE. I’ve broken down all the suitable brokers available in Malaysia with simple details in the table. Personally, I’ve gone with Hong Leong Bank and will be using their system as an example throughout my posts.

To open my Hong Leong trading account, I had to pay a visit to their office at First Avenue in Petaling Jaya. I’d suggest giving them a call (03-7728 8222) beforehand to determine the documents they need to proceed to avoid having to make multiple unnecessary trips. What I had to bring with me during my trip was my NRIC and verified copies of my savings account.

Cash or Margin Account?

Always a cash account. Unless you’re really experienced and confident in your trading abilities, please DO NOT even consider a margin account. A margin account, also known as a collateralized account allows you to borrow money to buy shares. Your broker charges you interest or higher fees for the right to borrow that money and uses your security as collateral.

Using leverage to buy your shares is very very dangerous because of a clause and event known as a Margin Call.

A margin call is a broker’s demand on an investor to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin (based on their own particular formula).

Basically, if your portfolio value falls below a certain amount, your broker will require you to top up until you reach that threshold. If you don’t they’re going to start selling your shares, at a loss. And it is extremely easy for your portfolio to fall below that threshold because the stock market is so volatile in the short term.

In short, go for the cash upfront account.

How much should I start with?

With Hong Leong bank as an example, they charge a Flat brokerage rate of 0.1% subjected to a RM8 minimum brokerage. With these charges, since you will be charged a minimum of RM8 anyway, the minimum amount you should technically trade at would be RM8/0.1% = RM8,000. This is not including your stamp duty, clearing fees as well as GST.

The stamp duty is charged by the Malaysian government. You will have to pay RM1 for every RM1K rounded up to the nearest ringgit subject to maximum value of RM200.

The clearing fee is charged by the exchange’s clearing house – Bursa Malaysia. The fee is 0.03% of the contract value or value of shares subjected to maximum of RM1,000.

In my experience, these fees will set you back by about 0.25% per trade. More if you trade below the minimum threshold of RM8K.

With that in mind, ideally I would recommend you start with RM8K, but of course I realize that not everyone starting out is comfortable spending such an amount, which is why the lowest amount one should use to execute a trade would be in my humble opinion RM3K.

Picking your stocks

A simple method for stock investment in Malaysia and an early method I used in picking my stocks was to look at products I owned or purchase on a regular basis. For example while strolling through the grocery aisles, you’d notice 80% of the products on display are owned by a few major companies. One of them being Nestle. With that, I invested in Nestle early on and have held the stock since then. They provide steady dividends and Malaysians love their Milo, Kit Kat and Maggi.

Attending a company’s AGM such as Nestle’s will usually provide you with some pretty awesome door gifts. An example would be this year’s door gift back in April (read about it HERE). This method is as simple as they come and will only work if the stock is held for the long term and it is a steady and huge rock like Nestle.

There are tons of other valuation methods out there and I urge you to study them extensively and decide on a few that suits your risk appetite and attitude towards stock investment.

Photo source: philstar.com

End.

My investment philosophy has always been for the long term. And it is my belief that short term investments will always hurt you in the end.

Please let me know if I’ve failed to address any of your concerns. I hope I’ve at least helped Malaysians feel less daunted by the prospect of investing. As mentioned earlier, the next place to start would be your choice of a brokerage firm. You’d want to make a good decision here to avoid inconveniences in your investing journey. Start with my comparison of brokers in Malaysia.

It has been an incredible and amazing journey for me and I hope, for you as well. I will continue updating this post if and when I come across additional relevant information.

149 thoughts on “A Guide to Stock Investment in Malaysia”

Hi There. I feel grateful that you are willing to share your opinion to the public regardless of the purpose underneath this article.
I wonder since the heavy stocks being your first selection to buy, would the dividen derived be your priority too? Thanks.

You can plan ahead by using a financial calculator. You estimate it together with inflation of course. I’d be conservative and take at least a 3% inflation rate.

As for the comment, I had to search for it and I believe this is what you meant:

“Living off dividends of RM1.3m of stocks should be more than enough. Don’t forget your stocks will grow with inflation. So you don’t have to deduct that 4% inflation. That’s one of the wonderful things about stocks, businesses grow with inflation.”

What I meant was because the user was investing in stocks, and stocks tend to grow in line with or even more than inflation. Because businesses will increase their prices in line with inflation. If not, all of them would be bankrupt by now.

Hi Divvy,
I now own some shares thru an online broker. I like to know, how can I proof that I own the shares that I bought? Is there some kind of share certificate or something official from the company I bought into?

Hi, Divvy. I currently have RM 500K saved up and I’m in my late twenties. Judging by how things are going right now, I should make it to 1.2 or 1.3 million by the time I’m in my early forties. I then plan to retire at that time because the amount of money I have at that time is more than enough to sustain my life even at a withdrawal rate of 1.5 percent, so it’ll be a good cushion for any recessions. Do you think this is plausible, especially in the long term?

Thanks for writing in. First off, let me say that RM500K in your late twenties is a tremendous feat.
Achieving 1.2- 1.3 million in 10 years should be no problem at all. Are you currently investing that RM500K?

I personally do not think RM1.3 million is enough for you to sustain you living expenses. That’s because of inflation. In 10 years time, RM20,000 per year isn’t enough. I would argue that it isn’t even enough now.
Also, I always encourage one to go for a capital preservation method instead of withdrawing 1.5%, try to live off your returns / interest. For the sake of your future generation.

I’d recommend you start investing your money now, if you haven’t already. The above recommendations are general in nature because I don’t have all the details about you and I don’t even know your goals in life.

Ah, I guess I was a bit too nebulous with my earlier comment. I have my 500K invested in what I deem to be highly valued stocks (highly diversified across a myriad of industries, of course) and to that end, I plan to do the same with my 1.3 million as well. Of course, like any sane investor, I don’t plan on touching my principal at all, heck, I have two rental properties, a fully furnished terrace house and a semi furnished terrace housr, which yield me a combined profit of 2100 per month so that I don’t have to withdraw from my principal during downturns. As it stands currently, I’m living off of my rental profits alone with about RM 600 saved ( I’ll owe this to me being a heavy proponent of minimalism) I dont touch my salary at all and invest all of it, so over time it added up. I also received an inheritance, which aided a lot in me hitting this number at this age. What I was actually trying to say in my previous comment was this; Do you think that when I reach 1.3 million, I could live off of the dividends accrued ( I’m assuming a quite conservative return of 6 percent p.a here). Subtracting average national inflation from the equation and you get 2 p.a in actual growth. I plan to only live off of RM 20,800 p.a, which is actually 200 more than what I actually spend per month, so I’ll be using up somewhere around 1.8 percent out of the actual 2 percent growth I get, so there’s still room to grow. There’s also the additional security measure in the form of my rental properties. As for my goals in life, there’s nothing too extravagant that I want to indulge in, actually. I like reading a lot and writing, as well as watching anime, all of which don’t really cost much. I’m planning on side hustling post retirement through my writing so earning potential is still there, though, I’ll actually enjoy this, unlike my job 😛 I hope to receive more specific advice from you, now that I’ve basically laid down my entire financial situation. Thank you, again.

Looks like you’ve got everything set and planned out.
Wonderful that you’ve got RM500K invested already. So the 1.3m will be 100% stocks right? Not including your properties?

Living off dividends of RM1.3m of stocks should be more than enough. Don’t forget your stocks will grow with inflation. So you don’t have to deduct that 4% inflation. That’s one of the wonderful things about stocks, businesses grow with inflation. =D

You’re set!

Do drop me a PM on FB if you can. Maybe let me know how you did it and I can write a post on you and check back again 10 years later! (with your discretion and approval of course)
You’re an inspiration to us all! Real life financially independent Malaysian!

Hello, it’s me again! Sorry for the bother, but I just wanted to divulge your opinion on this. I see that you’re a proponent of investing in individual stocks but is it really secure? For the long term, I mean. Also, does managing your portolio of stocks require a lots of hands on interaction, like every day? Because I think that’ll be a huge time sink. Also, what would you reccomend a new investor do in order to pick the right stocks , or at least, as close to right as possible.

No bother at all. Managing a long-term dividend and fundamentally sound company takes up none of your time. Most of the time spent will be on analyzing the company before you invest. Thereafter, I monitor and keep tabs on the company like once a month. You can even do it once every quarter or once every 6 months.

I’d recommend a new investor to do their homework right and pick the right stocks at the right prices.

Before I can start trading, I need to deposit cash into HLeBroking. My income is mostly in Maybank and therefore if I were to use e-payment via M2U and this would incur RM0.53 per transaction. Would it be more cost effective if I were to use IBG to transfer to HL savings account (RM0.11 per transaction) and subsequently from HL savings account to HLeBroking account? Some lead time incurred but what is your opinion when there are few transactions within a month? Sorry for being out-of-topic.

I can’t remember if I did an instant transfer or if there is an option for the normal one when transferring from M2U to your brokerage account. Like u said though if you’re ok with the time it takes, I don’t see a problem doing what you mentioned.

However, I do remember there being the option to transfer without IBG though. It’s been awhile since I put in money sorry.

Yup! You’re more at the savings stage now. Continue reading up on investing and start reading annual reports of companies you like and want to invest in. Now is the time to build a watchlist.
In your shoes, I’d open a M2U savers account. Save up till I have RM5-10K. Move that to Maybank’s GIA account. That’ll act as your emergency fund. Thereafter, its time to save again and invest when you have RM3K maybe. If you have your family to handle your emergencies for the time being, go ahead and invest.

Hope this helped! Happy to see someone as young as 18 taking an interest in their finances. =D

Thank you for the informative and helpful responses Leigh and Mr Lye Heng Foo. I would like to ask you more questions and for more guidance so I can maximize the most out of my money at the moment through investment.

Today I have successfully opened a M2U account and bought RM 500 in the Unit trust CIMB-Principal Global Titans Fund through CIMB Clicks e-Invest. Initially I wanted to purchase CIMB Asia-Pacific Dynamic Income Fund but the minimum investment amount was RM1000 which is a little above my budget hence I went for the latter. I figured it would be a good idea as suggested by Mr Lye to by into a fund as I do not have much.

I would just like some feedback on my choices and what I should do next.

I just checked out CIMB Clicks eInvest, and the commission charge seems to be 2.5%, slightly higher than fundsupermart.com.my (at 1.75%). For small amount, I guess it doesn’t really matters, as I guess it is probably more convenient if you already have CIMB bank account.

By the way, coincidentally, I do have some investement in CIMB Asia-Pacific Dynamic Income Fund as well, at fundsupermart, and the minimum initial investement is also RM500. I do not have CIMB Global Titans Fund though.

Both the fund performance are good in my opinion, although the Global Titans seems to be slightly better, and older (more mature). It is important to know that the risks of the investment at the target geographical locations. As a rule of thumb for any investment, please diversify. If I have only RM1000, I would split RM500 for each fund, as both of these funds are completely “mutual exclusive” in the geographical investment.

And as with any investment, “dollar cost averaging” is the key to successful investment.

Good luck in your investment. Please let me know if you have further questions. Hope it helps !

I would suggest buying into mutual fund if you have anything less than RM1K per transaction. And especially if you are planning to invest RM100 every month. Otherwise, the brokerage fee (minimum RM8/RM10) is going to eat up all your stock return. Mutual fund fee is much higher in term of percentage, but since there no minimum charge, it will come out cheaper. Suggest you take a look at fundsupermart.com as the commission fee is low (1.75% for equity fund), and everything is done online. If you need consultation, then you have no choice but to pay more for Public Mutual (at 5.25% fee for equity fund). Investing RM100 at 1.75% fee is only RM1.75, compared to RM8 for stock purchase. Eventually, when you have bigger capital, you can withdraw from mutual fund, and buy stocks on your own. Hope this helps.

Btw, in comparison, for efficient “saving” on brokerage fee, best to invest at least RM8K per transaction if your brokerage firm is HL. Brokerage fee could range from 0.05% to 0.4%, and subjected to minimum of RM8-RM12, depending on the brokerage firm and the account type (cash/collateral with T+3/collateral with T+10) that you opened.

Hmm, usually my trading limit goes up first and a few days later the cash balance is updated.
As long as you can trade it should be fine though. Trading pin is your account pin. Its normal to require a pin when u place orders.

I submitted an order for a REIT and got all matched today. Does it mean I just done my first trade and I own the shares from now on?

If so, thank you so much for all your guidance man ! You have made my life easier from selecting a broker to owning my first share.

BTW, may I know what is the difference between the buy price and sell price?

When we buy a share we refer to the buy price right?

I noticed that the best buy price is always lower than best sell price. Since buyer buys shares based on the buy price, I wonder how the matching is done if seller sells he/her shares to the buyer based on the sell price which is higher than buy price?

Ermmm… Do you mind sharing how you track and monitor the performance of the shares you bought? Like what are the numbers you are tracking, returns, cost and etc.
A post about this maybe? Just a small tiny suggestion. Cheers =D

Hi Leigh,
I have mbb nominee acc and wanna change to direct acc, how to go about?
Will i have a broker/ remisier to assist me in trading with the direct acc?
How to trade using mbb direct account? (Eg online etc)
Thanks.

You should call up Maybank and ask/tell them you want to switch to a direct account.
Yes, you will still have access to a remisier. But be warned that if you go through remisiers, you will be charged more in fees. You should just trade online yourself.
All brokers have tutorials to teach you how to use their platform.

Let me know how it goes bro. Many MBB users have been duped into opening Nominee accounts. Some even mentioned they’re facing difficulties in switching to a direct account. Hope to hear back from you

Hi,I been mbb nominee account before,just transfer to direct account.actually is very easy,just call your mbb investment agent,he/she will ask you sign some document like open nominee account.within a week then can use direct account once activate.if you want to transfer your counters need to be inform them also, transfer counter need to be charged.you call them mbb investment for more detail.

Yea you should open a new one then. You can try asking them to waive the transfer fees. Selling and buying again, you’ll incur fees as well. Be sure to see which one is cheaper, to transfer or buy and sell.
Let us know how it goes.

Just opened a direct cds account in MBB, now I have 3 cds account in MBB! The other is non-margin account which I don’t use since I opened it.
I think easier to manage compared to opening in HLeBroking. Will update the pros and cons. But I takes 2 weeks to activate. It’s ok for me. I don’t trade too frequently.

Finally I got the funds into HLe to start invest. So according to your reply earlier, I will get charged the fees each time I buy the stock. If RM 8,000 is the threshold to offset the fees charged, then I’d need RM24k to just buy 3 Reits…I’m so broke lol. Is there a better way to buy many stocks and minimize the fees?

Thanks for reply. I tried trading on the platform today, keyed in the order since morning but didn’t get matched. Am I doing something wrong or there is simply no seller? How long normally before an order gets matched?

Haha you probably keyed in a much lower price that’s why it didn’t match. No one was willing to sell the shares to you.
If people are trading at RM1.20 and you put in an order at RM1.00, you’ll probably never get a seller. I normally just buy at whatever people are selling at and get matched immediately.

Hmm.. Now that’s weird. Try queueing according to the selling price at that time. Should be able to get it. No point waiting whole day because of 0.01 and the stock ends up rising by a lot.
Snap it up when you think the price is right.

Let’s say you queued for 1,000 units. If someone matches at 500, you’ll see a partially matched indicator. The remaining 500 will have to wait until it matches with your buy price again.
Hope this helped heh. Keep the good questions coming!

My Reits got matched just now. So a few more questions I wanna ask:
1. What happens next? I read about something T+3 where the money will auto deduct from the fund?

2. I occasionally saw some stocks that are selling say, at 1.50 throughout the day, but for a short moment it will dip to 1.46. But it jumps back to 1.50 after maybe 1 minute. What gives? I tried to buy at the low price but obviously it never got matched that way.

Congratulations! How many different REITs did you buy? Or is it just one?

1. Yeap. If yours is a cash upfront account you don’t have to worry. Your limit will automatically drop and on T-3 you’ll notice the deduction.
2. Mostly happens during the pre-opening and pre-closing sessions. My guess is people are trying to reduce and increase the prices.

I’ve heard there are ways to queue for these but I’m not sure how it works sorry.

I have a question but not sure how to word it. Um…at the moment of buying the shares, how do I know if I’m qualified to receive the dividend payout for the next period? And where can I find the announcement as to when the company declares its dividend as well as the amount?

Also, does these type of announcement affect the fluctuations of the share prices? Thank you.

You can visit the company’s website or just google ‘ABC Bhd dividend’. You should find a few sites listing their previous dividend months.
If you see a C* beside your counter it means you’re still eligible to receive the coming dividends. If it is an X* then you’re not eligible.

Dividends declared will, of course, affect the share price. If it is higher than expected then the price goes up. Vice versa.

I’m here to seek your advice again. So I started to receive dividends from the Reits and shares purchased. I took out all the dividends received and put together with my salary saving each month to re-invest them. Is this move from this point forward strategic? I wanted to replicate what you’re doing with your freedom fund. Although the returns I see now is hardly significant.

Ah, I see. Well, 3 million seems like a lot from my perspective, but I’m sure it’ll be easier and easier to hit that target when you hit your first million and compound interest ramps the snowball effect up a notch. I plan to retire on a sum of 1 million ++ only because my annual expenditures don’t really amount to much, usually around 1800 per month, 2k if I really splurge. I’ve got my own property through inheritance so rent isn’t really an issue. Do you think 1 million is a good lump sum to retire on for someone with my lifestyle? I’m also hell bent on remaining child free so children won’t be in the equation, ever. Does your method of putting dividends when you receive them in FDs still work with my projected lump sum, which is like three times smaller than yours?

RM3 million was just a figure I plucked out, it could be 1m or even 500K. The point is we will have an amount saved up to be used throughout the year so there’s no need to count on your dividends arriving every month consistently, as long as you average out your annual dividends, you should be fine.

To get a more accurate picture of your retirement, may I know your age this year as well as how much you’ve saved already?
With the info given, RM2K monthly expenses puts you at around RM24K yearly. At a rate of return of 5%, your capital needed is only RM480,000. RM1 million+ would be more than sufficient. The good thing about stocks is that company profits are expected to keep up with or even beat inflation. You can even afford a more lavish lifestyle.
And yes your dividends should be kept in an interest bearing account. I’d suggest Maybank’s GIA-i.

Hi, does Hong Leong charge you any fee of your dividend payout?In MBB,I was charged about rm5-6 every time dividend come out. If dividend Is Rm4 only, I will get nothing (good thing is I no need to pay them!!!)
Thanks.

Just to share some info, all nominees account will have such charges. I have experience with both nominee and direct account. Many years back, when they sent cheques for your dividend, I find it very convenient to use nominee account as I don’t have to go to bank to bank it the cheque, and there is outstation cheque processing fee as well. But not anymore currently, now with direct account, we can choose dividend auto-bankin from Bursa to the choice of banks directly, and it is free. So, I cannot understand why we still need nominee account, where they charge a few ringgits for each dividend for this.

Thanks for sharing this! Yup it used to make sense when they delivered dividend cheques in the old days. Right now, Nominee accounts are more for individuals or companies etc that don’t have the time to fill up the necessary forms for stuff like DRP or to purchase warrants etc. Not recommended for average investors.

Totally agree, for regular investors, direct account is what they should get. And to add more for the benefit of all readers here, only direct account can be used for IPO application. Nominee accounts cannot be used for IPO application. This is another plus point for getting a direct accounts.

Big thank you to your time and effort to guide all the new investors here. I liked the investing knowledge you have promoted in your blog, which is based on long-term investment, and discourages speculation (or usually read as gambling :D). Keep up the good work! I will definitely continue to follow your blog, and impart my knowledge, wherever needed & necessarily.

Just checked, it is Maybank Nominees (Tempatan) Sdn Bhd. I think I better change to Hong Leong. Can we manage the cash in the account like MBB? I mean can we transfer the money to current accounts and back in Hong Leong ourselves?
In RHB osk, they charge rm12 compared to MBB Rm8, and hard to transfer the money in rhb.
Thanks and regards.

Yup you might want to get it changed to a direct account. I’m confused, are you using Maybank or RHB now?

If you’re using Maybank, there’s no need to switch to Hong Leong, you can just call Maybank and get them to switch you to a direct account. If you’re using RHB OSK, I’d suggest you switch brokers because their fees are too high.
Not even staying competitive.

My 1st cds is RHB, 2-3 yrs ago opened account in MBB, majority is MBB now because RHB osk is inconvenient for me for the payment.
Good thing of RHB is I won’t trade too frequently because of it’s inconvenience and higher fee. Lol. Can buy and hold for long term.
I will check with MBB for the change. I remember last time I call MBB to enquire for the charges, they only replied me that can’t be waived but never inform about direct account.

Hi, I’m someone who wishes to be financially independent before I hit the age of 50 and it’s nice to see a blog that focuses on that goal from a Malaysian perspective because all I’ve seen are anecdotes from devoloped countries so far. The thing is, based on your Freedom Fund which I just glanced through, I assume that dividend returns each month fluctuate wildly? If that’s the case, how are you supposed to live off of those in retirement, when you’re not receiving monetary compensation at all, if there’s a month where you receive 1000 and another where you get 200?

As for the dividends not coming in monthly, don’t worry about that as it’s not an issue. I won’t be relying on monthly income.
Instead, I’d probably want like a RM3 million portfolio. The dividends earned will be put into an FD or savings account. And I’ll draw from there. Of course, that account I draw from would be sufficient to last me more than a year. So dividends coming in different months won’t matter at all.

Don’t worry about the age my man. The earlier the better. Start saving.
If you invest RM100 every month, the fees will kill you. I suggest saving RM100 every month, then you invest that RM1,200 every year. Or if you can save more, try to hit RM2K a year. Remember, the higher your amount invested, the less you pay proportionally in fees.

Hope this helps! Please ask as many questions as you can and lets get you started on investing.

I don’t know what’s gotten into HLe, 2 months is a bloody long time if you ask me.

You can always call and ask. Just have your client code ready. Takes about 5 minutes haha.
Collateralised is a margin account if I’m not mistaken. I don’t recommend anyone to invest on margin. You should change that to a cash account instead.

Same goes here, took more than 2 months for activation.
As for this collateralised account, l called up 2 different officers, they said it is a cash account… ???
By the way, thanks Leigh. Had been reading alot of your articles, a good motivation for me to start investing. Well, better too late than never. 🙂

I just wanna ask you one of the questions that’s been bugging me for a good while now and while this question doesn’t really relate to the article, it does have something to do with investment and early retirement know-how so I hope you’ll be able to answer it.

You’ve probably heard of the 4 percent rule, so I’m gonna skimp explaining on that. The thing is, since all the research on its practicality( and to a lesser extent it’s overt optimism of market performance) has been done based on the US markets, is it still aplicable in Malaysia? If no, what would you deem (or estimate) to be a “safe withdrawal rate” , that’ll last longer than 30 years preferably, in our country?

While I’m here, I’d also like to ask how you increased your portfolio value from 3000 to 300000 in just a few years. I apologize if I’ve got the figures wrong but I swear I read some comment on the site which said you did just that and if so, I want to know how.

The 4 percent rule works. But in a general and broad sense, it’s based on historical returns of the stocks in the US. To a certain extent, Malaysian markets do follow the US’ trend.
I don’t think we should base our withdrawal on 4 percent. I’d suggest you estimate your future expenses and costs (include inflation). And from there, determine how much capital you should have instead based on your expected returns.

Yup the figures are sort of right, I got that big amount mostly through savings. I save a lot and I have a few streams of income ie from businesses I have shares in. The returns from investing help as well. Can’t stress the importance of savings when it comes to investing.

Great job on explaining 🙂
I have a few questions though.
a) By using your strategy of long term buying and holding, is there a chance that the stocks you buy will stop paying you at a certain point or as much because of internal company problems? Would this mean you’re practically broke? I know of stock diversification but is there a chance of the aforementioned scenario happening even with that measure taken?
b) Say I’m planning to be financially independent, and I want to live off my dividends one day. Your strategy of reinvesting your dividends to further cause your investments to snowball would mean that I woudn’t have any dividends to life off of for the month, no?
c) Is there any chance of Vanguard coming to Malaysia anytime soon? I’ve read about it extensively on it on another website (Money Moustache) and I’ve found it to be one of the best deals I’ve seen.

I’m sorry if you find any of the questions I posted here to be silly or inane. I’m only 16 years old, so it’s obvious that my knowledge is lacking. However, I wish to be fully brushed up in this area by the time I’m in university.

Age doesn’t matter when it comes to investing! Thanks for writing in my man.

a) Investing in good companies long term, I’d say the chance of that stock not giving you dividends is close to zero. Only small companies go broke. But then again, anything can happen. This is what we call risk.

b) Well you’d have a job won’t you? I’m living off my salary now and reinvesting my dividends for the future. Maybe when I’m 50 or 60 I’ll stop working, then the dividends will most definitely cover all my expenses.

c) Very little chance. We don’t have a big enough market. I also think our current mutual fund players would lobby our government to prevent someone like Vanguard from ever setting foot in Malaysia.

Keep writing in my friend! Always happy to help. Ask as many questions as you’d like.

If say I have rm3000 to invest from today, and can add a capital of RM400+ every month, what would you recommend I invest into?
Sorry, I am extremely new to this world. But doing my homework on how everything works, getting a real jist of it.

Also will it be time consuming to manage your shares on a daily basis? Since I’m super busy during school time, but want to start investing

RM3,000 is a good place to start at 18. You need to open your account with a broker first. As for your RM400 a month, I suggest you invest every 6 months. That way, you can invest RM2,400 each time, saving you on transaction fees.
I’d recommend REITs for starters. As for which REIT, you’ll have to do your own research and analysis.

The wonders about long term fundamental investing is that you don’t need to manage it daily. Once a month is fine, sometimes even every quarter. You don’t need to hound and sniff at your stocks every day. Stress free!

I like how are your investing theories so simple to understand for us beginners out there. I have made my first trade not long ago but still can’t figure out the exact calculations on the fees imposed on it. Do you mind breaking down the exact calculation for me?
Let’s say I bought 5000 unit of stock A at RM1 each. Thanks! 🙂

There are a few parties that charge you. I’ll be using my broker – Hong Leong as an example.

First your broker charges you a fee, mine is 0.106%.
Second our government comes and takes a bite in the form of a stamp duty – RM1 for every RM1,000 invested. (max of RM200)
The final bite comes from Bursa Malaysia’s clearing fee – 0.03% of contract value. (max of RM1,000)

With your contract value at RM5,000, just do the math. 🙂
Hope this helped!

It isn’t meaningless to me. Look at my portfolio as a tree and its fruits as the dividends. The bigger my tree, the more fruits I have to eat. With RM300K, I have about RM12K of fruits to consume each year.
It doesn’t make sense to cut down the tree that’s feeding you right? I can always pass it on to the next generation. The tree will grow! 🙂

In short, I invest for the dividends (them fruits) that will help fully fund my lifestyle eventually. That’s the gist of my financial independence.

Lol I only saw this now. So can I say, your method is to keep investing from all the income you get from the full time job, and let the interest compound itself? I was wondering if I follow your steps, would I be able to achieve that too? As a start.

Do you only have this investment portfolio and job, without other income streams?

I would like to accrue more funds to have a more lavish lifestyle…but I don’t know if it’s possible to have that just by investing and not doing business.

Thanks for writing in, keep it coming!
Yes I save most of my salary to invest, the returns from my investment I will reinvest it again. You’ll most definitely be able to get to your financial goals quicker this way.

I have a day job, a business and my investment portfolio. I think a lot of people are fooled by the misconception that one has to start a business to make money / get rich. Just do what you’re good at, and if the right opportunity comes along, by all means, start your business. To me, savings and investing are the most important components to be financially independent.

Let’s say for example I decided to buy 2 different Reits, am I allowed to buy these 2 in a single transaction? To avoid multiple charges of clearing fees etc. Or maybe you can tell me how does it work?

I am writing in again. Recently I received my first dividend from Sunreits. However, there is a difference between the amount I calculated and the actual amount that I received. It was short about RM5. Do you know why this happened? Are there some sort of fees charged by Sunreits?

REITs are different, the 10% is reflected but they don’t pay corporate tax. Corporate tax in Malaysia is 19% right now. I meant no corporate tax when I said ‘no tax’. You’re actually saving that 9% in difference. Sort of.

Hope the article I linked earlier is helpful in explaining the special tax mechanics of a REIT.

Previously I opened a CDS account back when I was working with CIMB. That was part of their ESOS project, if Im not mistaken. As a young new joiner back then, I did not care much of this CDS account, until after recently. My question is: 1) does CDS account have some sort of expiry date or frozen account due to non-activities? 2) how can I check whether my account is a nominee or direct trading account? 3) can I open another CDS account, let say with HL apart from the one I already got?

You only ever need one CDS account. It is held with Bursa if I’m not mistaken. So you can open your brokerage acc with any other banks. It’ll all link back to that one CDS account.
1. I’m not sure if there’s an expiry, you have to call and ask. I’m quite certain there isn’t though.
2. To find out if it’s a direct a/c you should again call and ask.
3. Yes you may! Like I mentioned, it’s all linked to that one CDS.

1. No expiry date, but it could be made dormant/inactive. Need to apply for re-activation if it becomes dormant.
2. Please check with your broker (in your case would be CIMB Investment bank)
3. Yes, you can. There is no limit to the number of CDS account you can have. You can even have 2 CDS accounts under same broker for different type e.g. cash-only trading account, or collateral T+3 trading account.

You had inspired me to start fund like yours,hopefully it is not too late.
So for a start,should I invest in Reits first or blue chip stocks or unit trust?Lets say the beginning capital is around RM10-20k
How regular is your share investment when you first started?

Yea both REITs and blue chips will do fine. Remember that the higher your investment per trade, the lower your brokerage fees and other related costs.
I invested everytime I saved up around RM7 -8K when I first started.

Since you using HLeBroking, can I ask you whether the platform has market tracker or watch list with EPS, P/E ratio, Current ratio, Debt Ratio, interest cover, price to book ratio, and dividend yield column for easy fundamental analysis?

1. Any source for me to obtain historical data on Malaysia overall market or a specific stock up to 15 years?
2. When you are analyzing whether its a good stock to buy, what indicators do you usually take as a parameter? I have tried googling it, there’re tons, so just thinking in your personal investing strategies what usually do you look at?

Hopefully to get a reply from you, as your post is really informative!

1. Not all companies have been in business for 15 years. I use Hong Leong’s equities tracker. It goes back up to 5 years. The rest you could go to Bursa or the company’s website I suppose.
2. There are tons out there and I don’t discuss my research methods. It’s gona be very very exhaustive and at the end of the day everyone will have their own way of doing things.

Hi sir, what kind of fees will be incurred on a nominee account? I made a mistake of not ticking the account type box when applying because the woman over the counter told me not to choose and that someone from the brokerage site will call and advice me on it.

Considering that I’m a lazy investor, in your experience, which broker is ideal for me or has the lowest cost? I just wanna buy a bunch of ETF/index funds and forget about them until next year and so on…

In reply to both your questions, if you plan to invest in Vanguard funds, they are unfortunately not available locally.
You can however purchase US ones through brokers like Hong Leong. I personally own some Vanguard ETFs through Hong Leong and because of the high transaction costs involved, I get 0 net dividends every year.

So, I’d suggest buying it through brokers like TD Ameritrade. I hear you can email the singapore branch with your particulars and open an account easily. They provide much, much better rates. I plan to try them out soon but do keep us updated if you are planning to try it.

Of course my friend. Your fees may be a little higher in terms of % compared to when you invest more. But who cares, the most important step when it comes to investing is to START.
Go for it and godspeed.